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New Job? Review the Termination Clause Before Signing

· Employment Law

ALERT! EMPLOYMENT CONTRACTS MAY LIMIT YOUR NOTICE
Over 1 million more Canadians are working today than at the start of the economic recovery in July 2009*. While that is good news, it also means that potential employees looking forward to a productive and long working relationship with their new employer need to carefully review the notice of termination clause in their employment contract before signing and joining the company.

Why? I’ve just joined the company!
Although employers are required to provide statutory notice of termination, an employer can eliminate common notice.

DO THE MATH
For instance, statutory notice in almost all jurisdictions provides one week per completed year of service to a maximum of eight weeks. So this means no matter how long you work with a company, your maximum notice will still be eight weeks or eight weeks’ pay in lieu of notice. While for Common Law notice, the starting point benchmark is generally much more generous; one month per year of service (which is then adjusted upwards or downwards depending on factors such as age, salary level, nature of the industry, and importance/uniqueness of the position)
 

ARE THERE WAYS TO SET ASIDE THE COMMON LAW LIMITATIONS?
If the contract of employment contains wording, which clearly eliminates common law notice, it can limit what is owed to the minimum required under statute.
 

THE DIFFERENCE CAN BE SIGNIFICANT
Cases vary but the generally accepted position is that the wording of the limitation in the contract, must be clear and must mention all of the entitlements which an employee is owed under statute when terminated or it can be set aside. However, more employers are including these limitations in their contracts and they are getting better at using appropriate wording. As well, even where clauses were set aside in the past, judges are refusing to set aside these limitations in many more instances. The justifications for upholding limitations, which have been overridden previously, are not easy to explain so it is best to follow the advice in the next section.
 

TWO THINGS AN EMPLOYEE SHOULD DO

  1. First, get legal advice both before you sign a contract or accept any offer of employment. There may not be much you can do but you should understand your legal situation.
  2. Second, when terminated, see a lawyer before you sign anything, which you are offered. There may be changes, which have occurred to your status or the law which may allow you to contest a limitation clause. Signing something, which releases your employer from liability, will almost certainly be fatal to your rights.

Disclaimer
The materials provided on this site are for information purposes only. These materials constitute general information relating to areas of employment law familiar to employment lawyer, Shelley Brian Brown. They do NOT constitute legal advice or other professional advice and you may not rely on the contents of this website or blog as such.

* Statistics Canada. Labour Report, 2014

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